Ross McEwan named new RBS chief as profits hit £1.4bn
By Harry Wilson, Banking Editor
6:58AM BST 02 Aug 2013
Mr McEwan, the head of the state-backed lender's retail banking business had been widely tipped for the job in recent weeks after two of the main external candidates ruled themselves out of the race to replace Mr Hester.
He will take on the top job on a £1m salary - less than the £1.2m Mr Hester received - and get a £350,000 cash payment in lieu of pension.
Mr McEwan, a 56-year-old New Zealander, has asked to defer awards under his current role until 2017 and to forgo an annual bonus as chief executive for 2013 and 2014, but will be eligible for a long term incentive award next year.
The first half results on Friday mark the first time the bank has made a profit in two consecutive quarters since 2008. Net attributable pre-tax profits at the lender were £535m, compared to a loss of more than £2bn in the same period in 2012.
RBS said its capital strength continues to improve and expects to reach a core capital ratio under full Basel rules of more than 9pc by the end of this year.
The lender also took an extra £185m provision to compensate customers for the mis-selling of payment protection insurance, taking its total bill to £2.4bn.
Stephen Hester, who is due to leave the lender by the end of the year, said: "RBS's journey from "bust bank" to "normal bank" is largely done."
However, he said "no small task remains" as he welcomed the appointment of Mr McEwan, whom he said made a "very positive impact since joining RBS last year and has a track record of strong accomplishment in customer focused banking".
The New Zealander joined RBS a year ago this month from Commonwealth Bank of Australia, where he had led its retail banking arm for five years.
He will be expected to stay in post until the privatisation of RBS, which is 81pc owned by the state, is complete. This is expected to take at least five years, however Mr Hester recently said he thought the full return of RBS to the private sector could take a decade.
Mark McCombe, the head of BlackRock’s Asian operations and a former senior executive at HSBC, last week said he had decided against taking the job, while David Roberts, deputy chairman of Lloyds, is also understood to have been approached to replace Mr Hester, but turned down the role.
George Osborne, the Chancellor, said on Friday that Mr McEwan had impressed him with "his vision of RBS as a strong, UK-centred corporate bank that is focused on supporting the British economy" as he welcomed the appointment.
"He's committed to a new culture at the bank that puts the customer first, whether it's the family or small business or large company. I think he'll provide the leadership RBS needs as the bank puts the mistakes of the past behind it, and the government seeks to get the best value for the taxpayer from the money the last government put into the bank," he said.
Investment bank Rothschild is currently studying options for a potential separation of the lender into a “good bank” and a “bad bank”. The move follows a recommendation by a cross-party commission for the Treasury to investigate whether there would be any advantages in splitting up RBS.
RBS shares fell more than 4pc in early trading on Friday - the biggest faller on the FTSE 100.